BAHR213 - 3rd Exam

Refers to the conflict of interest inbuilt in the in the relationship between one party who is expected to act in another's best interests.

There will be circumstances wherein the investments of the shareholders will not be maximized due to unrelated diversification of the principals.

This is a common agency problem that they face, it is unavoidable that the principals will have doubts to their agents who perform the day to day operation of the corporation.

A potential conflict may occur since it is possible for the corporation's managers to have personal objectives different from what the principals want.

This is the special authority given by the shareholder to a proxy shareholder who will vote in his behalf. By law, this is not possible to vote by proxy without the given special authority.

A conflict between the use of cash flows that serves as the resources of principal gathered after an investment

Institutional investors just expects dividend in exchange of their money invested in a specific period of time. They do not fully understand how the corporation works but, they just want to have productive results of their investments.

Refers to media focusing on financial new and updates. It may be newspaper, TV Channels, magazine, broadcast program or other media. This is an avenue for the company to publish information regarding the recent status of the company.

Refers to the entity who trades and facilitates the buying and selling of stocks and securities, they offers services for the redemption of shares also. Stocks, bonds and other securities that are initially offered by investors are done in a primary market and subsequent trading is done in the secondary market.

Refers to the group of individuals who acts as agent who issues stocks for securities of the corporation. They also maintain a brokerage or a dealership operation and offers consultancy services regarding investment issues.

Refers to corporation that are always on watch to a company for a possible hostile or friendly takeover.

Refers to companies or business entities who offer the same product as the company is offering. It affects governance in ways like the competition on getting investors.